In August theEconomic Sentiment Indicator(ESI) increased sharply by 2.7 points in the euro area
(to 95.2) and 3.1 points in the EU (to 98.1). The indicator rose
for the fourth successive month in both regions, marking a
two-year high in the EU.

Economic sentiment indicator (s.a.)

AugustEU: 98.1-
Euro Area: 95.2

Europa

Euro area developments

In the euro area, the strong increase
resulted from pronounced improvements in confidence among
consumers and managers in industry, services and retail trade.
Only in the construction sector confidence weakened. Economic
sentiment improved in fourteen euro area countries and in all of
its five largest economies, i.e. the Netherlands (+5.2), Germany
(+3.3), Italy (+2.0), France (+1.6) and Spain (+0.8).

Industry confidenceincreased significantly (+2.7) fuelled by managers' much
more positive assessment of the current level ofoverall order booksandproduction
expectations. Their assessment of
thestocks of finished productsimproved too. Also companies' assessments
ofpast productionand thecurrent level of
export order books, which are not
included in the confidence indicator, were much more
favourable.Services confidencesaw a significant increase as well (+2.5),
resulting from a sharp rise in managers' assessment of thepast business situationand important improvements concerningpast demandanddemand expectations.Consumer confidencecontinued its upward trend that started in
December 2012. Its marked improvement (+1.8) was mainly thanks to
more optimistic views on thefuture
general economic situation.Consumers'
opinions on thefuture financial
situationof their households and on
theirsavings over the next 12
monthsalso brightened, while
theirunemployment expectationsremained unchanged. Alsoretail trade confidenceincreased substantially (+3.3). Managers were
particularly more confident about thefuture business situation.
Also their assessments of thepresent
business situationand theirvolume of stocksimproved markedly. By contrast, theconstructionsector registered
a decrease in confidence (‑0.9), resulting from managers'
worsened assessment of bothorder
booksandemployment expectations.Financial services
confidence(not included in the ESI)
increased sharply by 3.5 points, driven by a striking increase in
managers'demand expectations.While managers' assessment ofpast demandimproved slightly, their views on thepast business situationdeteriorated somewhat.

Employment planswere revised upwards in industry, services and retail
trade, while decreasing in construction.Selling price expectationsremained broadly stable in industry, services and retail
trade while increasing in construction. Consumers' price
expectations for the next 12 months increased as well.